A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
U.S. non-farm payrolls are being released at time of writing. The report indicates 138,000 U.S. jobs were created in May relative to the consensus economist estimate of 182,000.
There are some interesting dislocations in global oil markets suggesting that, one way or another, a big move in the commodity price could be ahead. Credit Suisse strategist Jan Stuart writes,
"Leading edge data are signaling a large global supply deficit. While hard data for China and Europe May inventories are still outstanding, we are very much encouraged that all visible data show stock draws, and that market chatter around China suggests crude inventory building has slowed down. The market clearly was running a supply deficit in May, which should deepen in June … A scary dissonant among the mostly constructive signals remains the shape of the curve, more specifically the WIDENING Brent contango."
In simple terms, the weakness in the crude price this week makes little sense in terms of fundamentals, and the futures curve is moving in the opposite direction it should. One side of this trade is likely to be proven wrong.
"@SBarlow_ROB CS: Brent curve denying inventory draws" – (research excerpt) Twitter
"Oil market to OPEC: Show me the data" – CNBC
"@SBarlow_ROB Oil: big draws and selling (Citi) " - (research excerpt) Twitter
"OPEC's strategy behind oil production cuts is not what you think" – Barlow, Inside the Market
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Thirty years ago, timely credible market information was scarce and "read everything you can find" was a decent strategy. Now, there is so much information that investors need to be careful what they read. Morgan Housel helps with this process by warning about "expiring knowledge,"
"Expiring knowledge catches more attention than it should, for two reasons. One, there's a lot of it, eager to buzz our short attention spans. Two, we chase it down, anxious to squeeze out insight before it loses relevance."
"Expiring vs. Long-Term Knowledge" – Collaborative Fund
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Our web traffic statistics continue to confirm that domestic investors could not care less about the Chinese economy, while I maintain that the country continues to determine most commodity values and a lot of Canadian stock prices. Former UBS economist George Magnus presents some strong analysis for those few who follow the link below.
"China turns up the regulatory heat – for now" – George Magnus
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Tweet of the day: "@Ole_S_Hansen #Oil failed to find support from US stock declines. Rising exports and production both hurting Opec's cutting efforts #oott " – ( nine charts) Twitter
Diversion: "11 images that capture the incredible vastness of space" – Vox
Scott Barlow